State‐owned Enterprises, Exporting and Productivity inChina: A Stochastic Dominance Approach

Abstract

AbstractA popular explanation forChina's rapid economic growth in recent years has been the dramatic increase in the number of private domestic‐ and foreign‐owned firms and a decline in the state‐owned sector. However, recent evidence suggests thatChina's state‐owned enterprises (SOEs) are in fact stronger than ever. In this paper, we examine over 78,000 manufacturing firms between 2002 and 2006 to investigate the relationship between ownership structure and the degree of firm‐level exposure to export markets and firm‐level productivity. Using a conditional stochastic dominance approach, we reveal that although our results largely adhere to prior expectations, the performance ofSOEs differs markedly between those that export and those that supply the domestic market only. It appears thatChina's internationally focusedSOEs have become formidable global competitors.